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While the
multitudes debate over whether an economic recovery is coming to the United
States, signals sound loudly in harsh tones.
While they point to the recent rise in the USDollar, signals sound loudly in
harsh tones. Admittedly the signals are confusing, but they are important.
The long-term bond yield for USTreasurys threatens the 4.0% mark. The crude
oil price is close to threatening the $100 mark. Sleepy financial market
anchors and mavens offer comment, but might miss altogether the significance
of the signals. The signals clearly mean great strain on the credit markets
still, and gradual decay of the major currencies led by the USDollar.
PREFACE ON MARKET
RIGS
The hearings took
place two weeks ago. The news of Andrew Maguire's testimony on March 25th has
circled the globe, ringing shrill in the ears of anyone half awake. Maguire
is a metals trader from London,
but watch somehow that his career takes a turn for the worse. So far the car
carrying his torso has been run off the English roads. He still walks and
talks, but whistle blowers usually have short lives and shorter careers. Laws
protect them, but not from the powerful syndicates. Maguire outlined the
corruption in the gold market, and abused domination by JPMorgan in
particular. The monolith transmits its signals and enlists the support of a
small army of traders who pile atop the price suppression tactics. Despite
almost 20 years of complaints lodged with the Commodities Futures Trading
Commission, JPMorgan continues to operate with such a high degree of impunity
that their staff openly boasts about after their illicit profits are
garnered. Maguire guided the CFTC, headed by Goldman Sachs alumnus Gary
Gensler, through recent gold price manipulations before during and after a
non-farm jobs report was issued. Maguire outlined in some detail how orders
to short gold arrive in volume over 2500 contracts, designed to overwhelm the
market, often when the market is thin. They are almost always naked short
sales, without benefit of bullion posted as collateral. They are executed with
the implicit blessing of the USGovt and UKGovt. The trades are not intended
to seek the optimal price, but rather to corruptly reduce the market price.
The GATA warrior (aka El Cid) named Bill Murphy offered his testimony at the
hearings, running fleet footed past the secondary coverage easily. He has
submitted many complaints over the past few years, all falling on deaf ears
and blind eyes. See the Gold Anti-Trust Action article on the unprecedented
hearing (CLICK HERE),
which has been covered by dozens of other web journals. Nowadays, in order to
be treated to the actual news, one must rely upon the alternative locations
from the internet, like Zero Hedge and their small platoon of Wall Street
soldiers in service to the truth (CLICK HERE).
The US
financial markets are slowly being revealed as a series of corrupt Ponzi
schemes. The gold market is the vulnerable linchpin for the USDollar and
USTreasury markets. That is why gold is so important to be controlled and
suppressed. The diverse sanctioned illicit and illegal activity renders it a
damaged market screaming to be freed. Some readers and subscribers alike have
written to the Jackass email inbox with messages of hope and some
satisfaction, in the wake of the Maguire testimony about the CFTC lapses. The
meeting organizers might have thought the hedge funds would be blamed for
outsized illicit positions, but the blame was squarely place upon JPMorgan
and the Big Four firms. The exposure process is long and slow, however. The
Goldman Sachs class is still in control of the USGovt purse, still guides
funds to Wall Street after first feeding at the trough, still operates as the
great vampire squid in search of money pools as Matt Taibbi bravely
describes. The news has circled the globe, finding the financial pages in London
and Germany.
Some believe the news is too hot and viral to be reported on the mainstream
US press networks. Do not hold your breath for exposure in the Untied States,
where the syndicate maintains controlling ownership of the press networks,
bringing them to heel, dictating their many messages, filtering their stories
as suitable for coverage, painting patriots as villains and criminals as
heroes. But, lest one despair, there is hope that exposure will come as
powerfully and broadly as the morning sunrise. The lackey US press might
cover the story eventually, but only after almost the entire planet covers
it. My Jackass article about the corrupted gold market last May 2009 made a
splash, earned some accolades, but also invited some mockery by nitwits who
have turned silent. The bust of the gold market is in progress, whether or
not people wish to see it. The hitmen cometh to the gold exchanges.
London has been
selling gold contracts without gold bullion in inventory since mid-December.
They almost entirely settle long gold futures contracts with cash settlement,
offering a 25% cash bribe. One must wonder if a non-disclosure contract is
signed on the way out the door. Gold bullion has been flying out the vaults
and doorways at the London Bullion Market Assn for months. The Chinese and
Arabs no longer trust the London or New York syndicate in control, since
behind the curtains much gold has been improperly leased and replaced by gold
certificates. The gold wars are fast turning ugly, with murder a recourse
used by one faction versus another in the quest for power in the next global
chapter. From the aerial view, not burdened by details of routes, names, and
gory items, one can find safety during the battles waged among titans, the
templars if you will. The Jackass is a pure observer in the process of
syndicate exposure, never wishing to hold detailed evidence, as in EVER,
since lifespans are cut off. My work is to connect the dots and to identify
the patterns revealed by them, then to say "I TOLD YOU SO"
afterwards each time.
The other
controversial stories continue to find verification at some levels. Consider
the tungsten gold bars, which some myopic editors refuse even to consider as
valid. A grand swap took place during the Clinton-Rubin Administration, to
remove the gold bars and replace them with gold plated tungsten bars, then
flood the system. A full replacement would entitle the thieves a $500 billion
net profit, a solid motive. The gold bar lists are no longer consistent even
at the US Federal Reserve. The Street Tracks SPDR (GLD) exchange traded fund
also has no longer any consistent bar lists. The tungsten story broke out
within the Hong Kong bank sector, where they reported several hundred
tungsten fake gold bars. The tungsten gold substitutes shown below arrived at
the W.C.Heraeus foundry, which is the world's largest privately owned
precious metals refiner and fabricator, located in Hanau Germany. The bar was
due for melting, and originated from an unnamed bank. More details are likely
soon enough. See the YouTube video (CLICK HERE) and
the Zero Hedge article (CLICK HERE).
The Gold
Anti-Trust Action committee made a statement after the German display of
tungsten laced gold bars. They wrote, "What appears to be the first
documentation of counterfeit gold bars made of plated tungsten was noted
today by Zero Hedge as having been reported by a German television station.
The counterfeit bar reportedly is in the possession of the W.C.Heraeus gold
foundry in Hanau Germany, said to be the world's largest. This sort of
thing might shake the gold market even more than, say, the International
Monetary Fund's confession that it really does not have any gold and that it
has been selling only bookkeeping entries all this time." Almost
every single claim of impropriety, price suppression, falsified accounting,
corruption in metals exchanges, and treason by US and British financial
leaders lodged by GATA have come to be proven true. My contacts report the
source of most tungsten gold bars is the United States during the Clinton
Admin, using a clever trail with shutdown smelters and the same shipment
routes as the narcotics (see Panama and Arkansas). Evidence is being
gathered, and mounts, for release at the strategic moment by more direct
players, since so dangerous to possess. For a fine article about the competing
properties of gold versus tungsten, and detection methods, see the article
entitled "Fake Tungsten Gold Found" by Trace Mayer (CLICK HERE). The tungsten gold theme is blossoming
and going mainstream.
STRAIN ON
LONG-TERM RATES
The Jackass has a
string of correct major forecasts in the last few years. See the call of a
growing trade gap with a falling USDollar exchange rate. See the call of an
unending housing decline. See the call for absolute bond market breakdowns
beyond the subprime. See the call of an insolvent US banking system. See the
call about Lehman Brothers going bust. See the call about Fannie Mae going
from mortgage finance sewage plant to USGovt sewage plant. See the call for
the Saudis to reject US$ payments for crude oil, pending action. See the call
about Dubai being the focal point of debt collapse. See the call about the
ruin of the gold market with gradual exposure, complete with bullion raids.
Now watch the call about Germany not aiding Greece, which gradually enters
default.
By far the area
of my worst forecasting record is long-term USTreasury Bonds. After the
autumn death of the US banking system, never to recover, my forecast was for
much higher prevailing interest rates. All claims to remedy the banking
sector are masked events to pilfer trillion$ in official rescue packages
without a hint of disclosure, pure syndicate activity. While the long-term
USTBond yield has touched 4.0%, the upward thrust is hardly strong. The
incredibly large USGovt debt issuance supply should have sent the long-term
rate to 7% or 8% or 9% or 10%, but JPMorgan has a device made by the same
foundry as the US Federal Reserve. While the USFed can print money at near
zero cost, the JPMorgan shamans can put to work Interest Rate Swaps at near
zero cost. The IRSwaps are instrumental in pushing down long-term
interest rates, using powerful leverage, the short-term USTBill as the
fulcrum, and the USGovt as the protective cover shield. A Double Dip
recession perception would go a long way to reducing the 10-year USTreasury
Note yield, as demand would shift from stocks to bonds. Notice the
significance of the 4.0% level. A huge reversal pattern is underway. The
critical right side resistance level has been 3.9%, well defended. The left
side critical resistance level has been 4.0% and 4.1% from late 2008. The
trend is up, accentuated by the stochastix index since October. Watch a breakout
above the important 4.0% level.
The chief nemesis
of Gold is the USTreasury, both a US$ instrument and a traded paper security.
THE NEMESIS USTREASURY BOND IS IN TROUBLE. Lately, something
seems to have gone awry. The official USTreasury auctions have not turned out
well. The direct bids and indirect bids and bound bond dealer participation
and bid ratios and accounting all stink to high heaven. Yet regulators are
nowhere to be heard. The USDept Treasury even has resorted to a new
fictional ledger item called "Households" to hide their vast
monetization. Recall USFed Chairman lied to the USCongress about
continued monetization. The Household item, so we are told, pertains to
Fannie Mae and the oodles of Pension funds out there who buy up hundreds of
billion$ worth of USTreasury paper. They are joined by armies of private bank
CD investors. How preposterous!! Fannie Mae is selling USTreasurys, if truth
be known, since slower repayment of mortgages has reduced the need for
hedges. The Fannie Mae convexity is a remarkable phenomenon, whereby they
dump their USTBond hedges as rates rise, and as homeowners hold loans longer
into maturity. The hedged protection offered by USTBonds, in offset to
mortgage bonds in performance mode, would not be needed if the mortgage
defaults continue. The defaults are still increasing. So Fannie Mae sells off
huge blocks of USTreasurys. But they are the Household ledger item doing the
buying, right??
Other factors are
at work. The Greek Govt debt situation has brought about a serious decline
in confidence for all government debt. It is becoming widely understood
and accepted that sovereign debt receives high credit ratings not deserved.
Institutions are not lining up to purchase USTreasurys at auctions. The
USGovt with its masters JPMorgan and the USFed are deeply committed to a
gigantic circle jerk. They are buying up all the auctioned bonds, hiding the
evidence of their trails, using offshore entities to bid, colluding with
British bankers in the process, but they are facing a dead end. They have
forced the primary bond dealers into a state of terminal constipation. Then
the Chinese have been net sellers in the last few months. Were we not told
just last year that the Chinese had no choice but to finance the USGovt debt?
Yes, we were, and wrongly so!
The long-term
USTreasury Bond yields will not go out of control high, at least not until
JPMorgan is dead & buried. The yields might
rise a little more, enough to spark a response by the financial syndicate
that is Wall Street. They have a new trick in their repertoire. They talk up
the optimism and wondrous rescues for the Greek Govt debt, so that volume on
auctions rises significantly, enough for Wall Street firms to sell into the
rally they assist in creation. Then the Wall Street firms put out news
stories that the ugly nasty hedge funds are to blame for the fast decline in
those sovereign bonds. Notice how the Greek 10-year Govt bond yield has risen
to 7.19% this week, the highest ever. All talk of an aid package is just a
ruse for Wall Street to exploit. The other ploy used by Wall Street is an old
one. THEY WILL CAUSE A STOCK DECLINE IN ORDER TO PRODUCE FRESH USTREASURY
DEMAND. If the financial news networks obediently report the economic
recovery that graces the fictional pages of the US press is suffering from
non-existence, then the bond demand will grow in a huge way. Even sporadic
reports of a return to recession would greatly aid the USTreasurys.
Thus the USGovt
has a grandiose vested interest to promote recessions, and they are expert in
producing, sustaining, and deepening them. They must after all enable demand
to keep the USTreasury Bond bubble alive at near 0%. They promote the
nonsensical contradictory story of a jobless recovery. It should elicit much
more laughter, like claims of prevalent virginity at a house of prostitution,
like claims of wealth by a indigent street bum who holds a stolen credit
card. A quick shift to a temporary recession would be easy.
The USDept
Agriculture has reported this week that 39.4 million Americans, the most
ever, received food stamps in January. They are participants in the jobless
recovery. They are legion, whose recipient numbers are 22% from a year
earlier. The total number of Americans receiving the subsidy has reached a
record for 14 consecutive months. If one wishes for a whiff of reality, check
the February and March reports within the paid Hat Trick Letter. Details on
the powerful recession are provided, including home foreclosures, Fannie Mae
default and delinquency rates, bankruptcies, municipal bond craters, tax
revenue declines, and state budget shortfall crises. Such destruction must be
the dark side of the recovery process. NOT! It is part of the propaganda
process that conceals the deterioration with extreme power and momentum.
These aspects are the rotten underbelly of the USEconomy deep in
deterioration. It lacks an adequate industrial base, in case its clueless
cast of economists fail to notice. It suffers from debt saturation, which
explains why new debt offered in aid rescues cannot succeed in producing much
of any benefits.
Despite the fact
that USTBond yields will not go out of control on the upside, what might be
growing much worse is the fires in the JPMorgan credit derivative
workshop. As long-term rates rise, the Interest Rate Swap contract
turns hostile, electric, and viral. Enter leverage in support of trillion$ in
debt securities. The USGovt has the hidden credit derivative losses at
JPMorgan, at Fannie Mae, and at American Intl Group to contend with. If the
accounting were properly reported from basement labs, the new US$ creation
might be much more than a measly $200 billion per month seen in the
USTreasury issuance. The toll for credit derivative fires might be a few
trillion$ per month!!! The truth would kill the USDollar and send gold
skyward.
ECONOMIC COST OF
RUINED CURRENCIES
The dynamics of
the Competing Currency War are truly amazing and fascinating. When the Euro
currency shows fundamental weakness, if not turmoil within the union, the
USDollar benefits. Nevermind the $1.5 trillion deficit in 2009 and the
similar $1.4 trillion deficit in 2010 that the USGovt must drag along. The
USDollar has risen by about 10% against the Euro currency since November.
Some properly call the FOREX market a reverse beauty pageant whereby the
least ugly contender wins. The region with the least wrecked finances can
boast of a rising currency. We are in Chapter 2 to the Dollar Death Dance.
The first chapter occurred in autumn 2008 when Lehman Brothers was killed,
when Fannie Mae was nationalized, and when the dead AIG corpse was adopted by
the USGovt, the home of dead giants and fraud clearing houses. The demand
from credit derivative payouts for ruined corporate bonds and destroyed
mortgage bonds actually lifted the USDollar valuation. Payouts for Credit
Default Swaps, those perverse insurance contracts against collateralized
bonds, took place and did so in US$ denomination. The demand for the US$
zoomed. Uncle Sam danced hard, but without benefit of a functional heart,
without benefit of oxygenated blood, without benefit of a circulatory system
to distribute blood. The dead man danced.
The second chapter is centered upon the Greek Govt debt. Unfortunately for
Europe, but fortunately for the USGovt, the second chapter has many pages yet
to be written, from Spain, from Italy, and from Portugal. The Irish pages have
already been written, crumpled sheets lying in the corner. This note came
today by an email from an Irish friend. "Just heard from a good
friend in Ireland that the austerity measures adopted by the Dublin
government are causing untold hardship. He thinks there will be an uprising
among the people that could get very nasty indeed." Outsized
staggering Irish bank losses have been reported. The IMF fix is in and the
destruction will be completed. But the Greek tragedy plays out slowly. Hope
rises but is dashed. Aid is announced only to be illusory. Support is shown
but not sincere. Bickering has turned ugly, evidence of no rescue even
remotely possible.
The beneficiary,
we are told, of the Euro currency distress, is the USDollar. If the US$
exchange rate indeed was improving with tangible ancillary benefits, then a
confirmation would come with gold and the crude oil prices. Gold holds
its own, refusing to falter. But the crude oil price has just broken above
the $80 mark. It threatens the $90 mark and is a clear lock to hit $100 and
cause global shock waves. If the US$ is on the mend, on the rise, gaining
ground versus other major currencies, then the crude oil price should be
moving toward $50, and not toward $90. What we see demonstrates the
broken nature of the major currencies in general, and the USDollar in
particular. If the USDollar was returning to health, a breakout in
the crude oil price would never happen.
The consequence
is not pleasant of a rising crude oil price. The entire commercial sector of
the USEconomy has a cost structure tied to energy costs. The natural gas
price is indeed subdued. But crude oil is widely used in the futures markets
to hedge against the USDollar. The demand for such hedges has increased. The
light sweet Saudi crude oil is no longer available to meet WTIC crude oil
contract demands. The rise in the crude oil price for Europeans using the
Euro currency is even more pronounced, brought to view in previous articles. The
collection of major currencies is under siege, deeply damaged, and subjected
to constant debasement. The ongoing credit crisis and strong recession
requires a governmental response on all continents. In Europe, the Untied
States, Great Britain, and Japan, the printing of new baseless money
continues at an astonishing pace. All major currencies are together in a
death spiral. One key item of proof is the West Texas Intermediate Crude oil
price shown above. When it hits $100 per barrel, listen to the quacky silly
lunatic explanations given by the mainstream press and financial arenas. You
will not hear any argument that all major currencies are mortally damaged.
You will not hear any arguments that the central bank franchise system of
monetary management has failed in spectacular fashion. You might even hear
that the jobless recovery is strong enough to withstand the greater pressures
of higher energy costs.
THE STEALTH RISE
IN GOLD & SILVER
Give a hat tip to
James Turk of Gold Money. He wrote in December that the gold low for 2010
would occur in the first quarter with a $1075 price, and a possible impulse
low of $1050. We saw it almost exactly, but the year has nine more months to
slug through. The 1Q2010 has been put to rest, the quarter ended last week. The
March futures contracts are also put to rest, enough to clear a possible path
to a higher price for both gold and silver. The gold price chart has a
pennant pattern embedded that hints of a slow release to a higher price. It
should start slowly and gain momentum once above the enclosed pattern. The
news of the gold price rigging has had a positive effect on the psychology of
this gold market. The endless monetary growth and federal government deficit
explosion adds power to the gold price. Actually, the flip perspective is
more accurate. The major currencies are all being diluted in value, while
gold remains almost fixed in value. Seen from the currency point of view,
gold is rising. Notice the uptrend in the MACD, which addresses the moving
averages and the support offered. The long-term trend is still up, seen in
the 200-day MA. The consolidation could be at an end. One thing is for
certain. The gold community has been put to sleep. Most investors wait for
the breakout in price, only to pay a higher price. They tend not to be savvy
and capture the lower price during sleepy times. All claims of a gold price
plunge to $900 were stupid and baseless, but were given plenty of airtime. To
have a falling gold price when trillion$ of new money is created and
dispersed into the ether is pure nonsense, the part & parcel of Wall Street
syndicate tenets. Such invalid notions rely upon the goofy discredited
deflation argument that circulated.
The gold price is slowly moving up. Its psychological basis is gaining firm
strength. The recognition of ruined major currencies is gaining broader
acceptance. The corruption of central banks is being more widely understood.
The solutions offered to Europe are not only vacant, but they expose the
Untied States and Great Britain to comparisons of equal vulnerability and
similar fundamental wreckage. The gold price has made its lows in year 2010.
The next important level is $1150. The resumed Quantitative Easing programs
in the US and London will soon be given more publicity, more monetary
debauchery via rampant dilution. All talk of an Exit Strategy is pure
diversion, if not moronic. The USGovt cannot afford to pay higher
borrowing costs, nor can the USFed afford to dump its bloated balance sheet
on the credit market. Doing so would reveal that there is almost no
market for what they hold in leveraged toxic mortgage bonds. Doing so would result
in mortgage rates rising another 1% to 2% quickly. Not gonna happen! Instead,
mortgage rates will rise 1% on their own without an Exit Strategy, without
USFed liquidation of worthless bonds.
What would really
ignite the gold market would be further investigation of the rigged gold
market, some prosecution, demands by formal audits by USTreasury creditors,
and revelation of absent gold at the exchanges that trade in the gold market.
What would really ignite the gold market would be a resignation of the
Goldman Sachs preppy Geithner at the USDept Treasury, or better yet,
prosecution for bond fraud by him while serving as New York Fed Governor
during the Lehman Brothers scandal, its coverup, and its kill job.
Jim Willie CB
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